Senate fails to pass student loan rate plan
Party-line vote kills measure.
WASHINGTON — The Senate failed yesterday to advance a bill to keep federally subsidized college student loan rates lower for another year, prolonging debate on an issue that has emerged as an election-year flash point.
On a party-line vote, senators voted 52-45, short of the 60 votes necessary to proceed to debate on the bill.
There is no clear path forward at the moment for lawmakers, who have until July 1 to reauthorize lower rates for roughly 7 million borrowers who would otherwise see rates on subsidized student loans jump from 3.4 to 6.8 percent.
Democrats and Republicans agree that the loan rates should remain low, but — as with most noncontroversial issues these days — lawmakers disagree on how to pay for the plan.
The issue is of growing concern among younger voters and their parents and has dominated the campaign trail in recent weeks. President Barack Obama has pushed Congress to quickly approve an extension of the lower rates for another year, and presumptive Republican presidential nominee Mitt Romney has done the same.
A House Republican plan approved in late April would pay for the lower rates by cutting almost $6 billion from a fund for preventive health care.
Democrats pushed a plan to pay for the extension by ending a tax break that allows operators of some businesses with three or fewer shareholders to avoid paying payroll taxes by labeling some of their income as business profits rather than wages.
In a statement, the White House said it was "extremely disappointing" that Republicans voted against keeping loan rates low in favor of protecting people who take advantage of the tax loophole.
Senate Majority Leader Harry Reid, D-Nev., said the vote showed that Republicans are "more interested still in obstructionism rather than progress" and said Democrats would not slash the health fund, which pays for cancer screenings, diabetes prevention and other basic medical needs.
Senate Minority Leader Mitch McConnell, R-Ky., called the issue a "manufactured crisis," insisting Republicans also oppose allowing loan rates to rise.
"The best way to resolve this would be to sit down and discuss the way to resolve the differences between the House and Senate and pass it," he said.
In an event earlier yesterday, Sen. Jack Reed, D-R.I., and Sens. Sherrod Brown, D-Ohio, and Tom Harkin, D-Iowa, were joined by dozens of college students who support extending the lower rates.
Harkin insisted Democrats offered Republicans a chance to vote on their version of the measure alongside the Democratic one, if they would agree to allow the Senate to proceed to a full debate on the bill. But Harkin charged that GOP leaders rejected that offer because they did not want to force their own members to vote to eliminate the preventive care fund.
Republicans have noted that Democrats had signaled a willingness to cut the same preventive care fund during negotiations over how to pay for extending the payroll tax vote.
But Harkin said there's a difference between reducing the fund, which Democrats had said could be acceptable, and eliminating it, as Republicans now propose.